To the Street elite, the stock market is nothing more than a wealth manufacturing machine. As the housing bubble swelled, that machine revved into high gear, and the business plan was concise: cheat. The M.O. was simple, base the bonus on bogus paper profits, on assets such as risky, high yield mortgage backed securities that paid hefty fees up front, but would not implode until the bonus check was cashed. It was like playing black jack and calling hit or hold after the dealer turned his cards.

Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino

Even Wall Streeters concede they were dazzled by the money. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well.

And this year, the system is on course to hand the world’s wealthiest people $1.6B of the remaining people’s money. Not because of the industry’s great progress, of course.

Banks that have their hands out in Washington this year were handing out multimillion-dollar rewards to their executives last year.

The 116 banks that so far have received taxpayer dollars to boost them through the economic crisis gave their top tier of executives nearly $1.6 billion in salaries, bonuses and other benefits in 2007, an Associated Press analysis found.That amount, spread among the 600 highest paid bank executives, would cover the bailout money given to 53 of the banks that have shared the $188 billion that Washington has doled out in rescue packages so far.

The AP review of annual reports that the banks file with the Securities and Exchange Commission found that the average paid to each of the banks’ top executives was $2.6 million in salary, bonuses and benefits.

The banks are not just shameless, but fearless. With Goldman Sachs CEO Henry Paulson masquerading as the US Treasury Sectary and other Goldman underlings like Neil Kashkari in charge of TARP, the fox is watching the henhouse and no nest egg is safe. The Goldman banksters made out like bandits:

Lloyd Blankfein, president and chief executive of Goldman Sachs, took home nearly $54 million in compensation last year. The company’s top five executives received a total of $242 million.

This year, Goldman’s seven top-paid executives will work for their base salaries of $600,000, with no stock or cash bonuses, the company said. Last spring, before Wall Street’s staggering losses and layoffs mushroomed, Goldman described its pay plan as essential to retain and motivate executives “whose efforts and judgments are vital to our continued success, by setting their compensation at appropriate and competitive levels.” Goldman spokesman Ed Canaday declined to comment beyond that written report.

The New York-based company, after gains last year, on Dec. 16 reported its first quarterly loss since it went public in 1999. It received $10 billion in taxpayer money on Oct. 28.

Perhaps more impressively, Goldman ex-gangster made out like bandits too.

John A. Thain, chief executive of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year. Thain, a former chief operating officer for Goldman Sachs, came to Merrill Lynch in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he earned $57,692 in salary, a $15 million signing bonus and an additional $68 million in stock options.

Like Goldman, Merrill tapped taxpayers for $10 billion on Oct. 28.

Unlike Goldman, Merrill Lynch has imploded. Never before have so few taken so much from so many. Years of gluttonous payouts to the top tier, based on boom and bust credit manipulation, the sale of every kind of junk paper or toxic asset and ephemeral earnings reported as real have taken their toll on the real economy. The bonus system was the greatest act of piracy in history, and it wasn’t until the CEOs and big brass began to decline their bonuses that you knew the rats were leaving the ship.

Morgan Stanley’s three top executives — John J. Mack, the chief executive, and the co-presidents, James P. Gorman and Walid A. Chammah — will not be paid bonuses, the firm said. Bonuses for the bank’s 14-person operating committee will be cut by 75 percent.

The announcement came on a day when another Wall Street giant, Merrill Lynch, also announced that its senior executives would forgo bonuses this year. Several other major firms have announced similar moves as the public outcry over pay has escalated.

Merrill Lynch’s CEO John Thain was especially insensitive to the plight of the common man. In ruthless pursuit of his own higher purpose, he demanded a $10M bonus for driving Merrill Lynch into the ground. The $10M was roughly equal to the entire amount of taxpayers’ donation to Merrill at the time.

Merrill’s chief executive, John A. Thain, had requested a $10 million bonus this year, but the firm’s compensation committee balked at awarding him any payout, according to someone familiar with the situation but not authorized to discuss it.

Mr. Thain inherited a mess at Merrill when he became chief executive a year ago, and some argue that he prevented the firm from collapsing, as did Lehman Brothers, by selling it to Bank of America in September. Even so, some officials viewed his request for a bonus as ill-timed given the continuing troubles at his firm and the industry at large.

But Thain kept playing roulette and doubled down on mortgage backed securities and leveraged buyouts. He kept collecting the fees for bonus time and kept Merrill in debt for all time. He was manufacturing his bonus and made no pretense otherwise, nor was he shy to ask for what he thought was his.

Mr. Thain has said he deserves a bonus because he helped avert what could have been a much larger crisis at the firm, The Journal said, citing people familiar with his thinking.

Committee members are also weighing the fact that other Wall Street firms, including Goldman Sachs, which did better than Merrill this year, are not giving out bonuses to top executives, according to the report.

And John boy might have a point if he didn’t pilfer anything of Merrill’s that John Mack hadn’t chained to a truck and carried away himself. So Merrill unbelievably wasn’t going to give him his precious bonus. He knew it and beat the board to the punch by asking that he not receive any 2008 bonus.

Merrill Lynch & Co Inc said on Monday that Chief Executive John Thain, who agreed to sell the brokerage to Bank of America Corp earlier this year, has requested that he not receive a bonus for 2008.Thain told a board meeting Monday the decision was appropriate “given current economic and market conditions.”